In hot Canadian market, parents hold keys to homeownership
By Andrea Hopkins
TORONTO (Reuters) - Laura Parsons helped her son buy his first home four years ago, and she's ready to help her daughter do the same, making her part of what many say is a growing trend across Canada, where home prices have soared 84 percent in 10 years.
"I am going to give her the downpayment," said Parsons, 54, a mortgage banker in Calgary, Alberta, where an oil industry boom has pushed home prices to record highs. "We're the baby boom generation, we have more money than we ever thought we would, we have two incomes, we're saving, so I'm going to help."
Neither the government nor the real estate industry has collected data on parental aid to homebuyers. But experts say they are seeing more moms and dads helping their children, especially in the priciest markets.
"It is increasingly common in the city of Toronto, where prices are pressing the limits of affordability, for most buyers looking to get a foot into the market," said Steven Fudge, a sales representative at Bosley Real Estate in Toronto. The 25-year industry veteran says at least 50 percent of his buyers are bolstered by parental money.
A 2013 survey of 2,000 people for Bank of Montreal found that 27 percent of first-time buyers in Canada expect their parents or other family members to help them purchase a house.
That young adults need help with a first home should come as no surprise. Home prices in Canada hit record highs in late 2013, according to the Teranet-National Bank house price index. Industry data showed the average home price nearing C$400,000 ($358,800) in December. That's up 10 percent from a year earlier and 84 percent from December 2003, when the average price was
While the U.S. housing market is still recovering from a collapse in 2008 that triggered the global financial crisis, Canada's market never crashed. Partly that is because prices didn't rise as much during the U.S. boom, as Canadian lenders were more conservative than their U.S. counterparts. Continued...